KUALA LUMPUR: The Small and Medium Enterprises Association of Malaysia (Samenta) has praised the government's decision to exempt up to 77.4 per cent of small and medium enterprises (SMEs) from compulsory financial audits starting next year.
In a statement, Samenta noted that the move allows SMEs greater flexibility to make decisions aligned with their specific business needs.
"For example, a company may only decide to have an audit performed if they are applying for a government grant or to obtain a bank loan," said Samenta national president Datuk William Ng in a statement.
The new audit exemption, issued by the Companies Commission of Malaysia (SSM), exempts SMEs with up to RM 3 million in turnover or assets or 30 employees from having to appoint an external financial auditor.
This exemption will be phased over three years by size, with smaller SMEs with RM 1 million in turnover being exempted from 2025 onwards.
Ng said that as audit fees can range from RM 1,000 to RM 30,000 per company, the proposal not only saves micro and small enterprises considerable costs and time, it also promotes greater efficiency at all levels of the economy.
"In almost all micro and small enterprises, the directors and shareholders are the same, so it serves no purpose to mandate auditing. The exemption also put us in line with Singapore, where companies with revenue and assets less than S$ 10 million are exempted from compulsory audit.
"In Australia, the threshold is even higher, where SMEs with revenue and assets less than A$ 50 million and A$ 25 million, respectively, are exempted from audit," he said.
Ng added Samenta will now engage with Bank Negara Malaysia and financial institutions to speed up the adoption of alternative credit scoring and to exempt the requirement of audited financial reports from micro and small enterprises for microfinance.
"With digitalisation, the upcoming e-invoicing regime and better credit scoring, audited reports are redundant and archaic and should not be made mandatory for financing purposes," said Ng.